Free Advice on Real Estate: What is the Difference Between a Real Estate Broker and A Salesperson?

Not surprisingly many people does not know the difference between a broker and a salesman/woman (or salesperson). Of course, unless a person specializes in real estate, a lawyer, or maybe just plain curious, then sometimes one does not have the time to intimately study this field.

With your permission, I shall digress from my usual amateur essays and lethargic attempts at poetry :), and instead embark on the tedious and boring topic of real estate brokerage in the Philippine setting.

To some this might not be interesting at all but this might be of help to others who are thinking of buying or selling their properties in the Philippines.

My interest lies in both : as a broker, and as a property owner – who has benefited from the experience of having sold several of  his own properties through another broker.

The legal aspect (based on RA 9646)

1. A real estate broker is a natural person registered and licensed by the Professional Regulation Commission (PRC) who for a professional fee, commission or other valuable consideration acts as an agent of a party in a real estate transaction, while a salesperson must be accredited by the Professional Regulatory Board of Real Estate Service (and performs a service only in behalf of and under the direct supervision and accountability of the broker).

No salesperson can engage in real estate brokerage unless accredited for a certain licensed broker. A maximum of 20 salesperson can work under a broker in corporations.

2. A real estate broker must pass an exam given by the PRC (before by the DTI) while the salesperson is not so required.(Exception: Real estate brokers who can be registered without examination under Section 20 of RA 9646).

3. A broker must be at least a bachelor’s degree holder while a salesperson is only required up to 2 years college education and 12 credit units in real estate trainings and seminars.

4. A broker must have a certificate of registration and professional ID (renewed every 3 years) prominently displayed in his office while the salesperson though issued an ID does not need to have an office.

5. The real estate broker must be a member of the accredited professional organization much like that of the PMA for doctors, and the PICE for civil engineers.

6. For his practice, a real estate broker must post a surety bond of P 20,000.00 (renewable every 3 years) while the salesperson does not need to do so.

7. A broker is entitled to receive or demand a fee, or commission, or any compensation for his professional service from any person in a real estate transaction while a salesperson can not do so. The salesperson must obtain his/her share of the fee from his/her broker.

8. The salesperson cannot by themselves be signatories to a written agreement involving a real estate transaction unless the real estate broker who has direct supervision and accountability over them is also signatory thereto.

The Practical Aspect

1. If you want to sell a property, why not go directly to the broker? The transaction is protected by law.You can also complain to the PRC or the Board if the broker violates his Code of Ethics.

The salesperson works under a broker anyway; and the broker can have many salespersons who works cooperatively to sell (or buy) a property. Hence, the more salesperson a broker has the better for the owner.

2. There is no additional fee for hiring a broker.

A broker shares the fee, or commission with the salesperson – which is usually fixed by agreement within the local board.

If the listing agreement is say 5% (in case of residential property), the seller does not shell out additional fee for the salesperson.  The broker usually splits the commission 50-50, or 50 -60, etc… depending upon the local practice, or the agreement between the broker and the salesperson.

3. Always ask for an ID of a salesperson, and who is his/her real estate broker. Then the seller should verify the accreditation of the salesperson with the broker.

Warning: There are many fly by-night nonprofessionals masquerading around as legit.

4. The practice of real estate brokerage without a license (except for those exceptions specified under RA 9646) is illegal in the Philippines. Why must you must you endanger or create a problem for yourself by violating this law?

The penal provision of the law is reprinted in toto below:

“SEC. 39. Penal Provisions, – Any violation of this Act, including violations of implementing rules and regulations, shall be meted the penalty of a fine of not less than One hundred thousand pesos (P100,000.00) or imprisonment of not less than two (2) years, or both such fine and imprisonment upon the discretion of the court. In case the violation is committed by an unlicensed real estate service practitioner, the penalty shall be double the aforesaid fine and imprisonment.”

Bye for now, and Happy New Year 2011. 🙂

1 thought on “Free Advice on Real Estate: What is the Difference Between a Real Estate Broker and A Salesperson?

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